Retailers' ecommerce sales queried

News, 29 August 2013

NEW YORK: Online sales by leading US retailers are increasing but, despite their claims of stellar growth rates, the actual revenues generated by digital channels are comparatively insignificant, new analysis has revealed.

With many businesses actively promoting their digital prowess to investors, the Securities and Exchange Commission, a US government body, asked large chains, including Wal-Mart, Target and PetSmart, to supply figures to back up these assertions.

It cited Target as an example of this trend. Despite admitting to the SEC in June that "digital sales represented an immaterial amount of total sales", it told investors more recently that such sales were growing at a double-digit rate and the company was "moving quickly to ensure we stay relevant in an increasingly digital marketplace".

A Target spokesman said that the retailer tells investors that online sales currently make up less than 2% of its $73bn in overall sales.

While Wal-Mart has forecast $10bn in online sales in 2013 and made "winning in e-commerce" one of its corporate priorities, the data suggest it has not previously broken out its online performance.

Correspondence with the SEC revealed that e-commerce contributed between 0.1 and 0.2 percentage points to Wal-Mart's growth figures in the past two years.

"E-commerce is a fast-growing part of our business where we are investing aggressively, and we thought it was good time to provide context to investors," a Wal-Mart spokesman said.

Elsewhere, a PetSmart spokeswoman said the chain saw ecommerce as a growth opportunity but it currently represented less than 1% of its sales. The company also argued, in a letter to the SEC, that disclosure of such metrics "would result in substantial competitive harm" as rivals exploited the information.

Several retailers said they took an omnichannel approach, not breaking out online figures since customers were shifting purchases between stores, websites and mobile apps.

"There's such a blurring of the lines that it doesn't make sense to delineate between whether it's an online or in-store sale," said Casey Carl, president of multichannel at Target.

But investors see online sales growth as an indicator of the ability of retailers to adapt to changing shopping habits and, therefore, of longer-term success.

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